As the auto industry takes center stage, EV makers are stealing the show.
After a year of robust growth in production and sales, auto volumes are expected to decelerate in 2024 as supply chain constraints ease, according to Goldman Sachs.
The Analyst’s Downgrade: Mark Delaney has downgraded the rating for Magna International Inc MGA from Buy to Neutral. He also downgraded Aurora Innovation Inc AUR from Neutral to Sell.
Understanding the Auto Thesis: Delaney notes that auto sales are likely to revert to “typical historical levels” as pricing moderates.
Read more about other stock ratings from analysts.
Delaney wrote, “We believe the company’s relatively slower content per vehicle growth compared to our broader tier 1 coverage will limit EPS/FCF improvement, especially as auto production growth moderates.”
“While Magna has been investing to support new programs in megatrend areas, we believe its backlog could be impacted by slower BEV ramps from key customers including Ford and GM (e.g. its battery enclosure business),” he added.
Delaney further commented on Aurora’s stock rally, stating, “We now believe that the ramp cadence for its AV trucks could be more measured over the intermediate term than we had previously expected to better reflect partner commentary and the pace of other AV ramps.”
Price Action for MGA and AUR: Shares of Magna and Aurora had declined by 5.64% to $55.83 and by 10.77% to $3.33, respectively, at the time of publication on Wednesday.
Explore: Crude Oil Gains Over 3%; US Manufacturing Activity Contracts For 14th Consecutive Month
Photo: Aurora video screenshot
